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Small Business Profits Hit 45-Year High

Profit growth among U.S. small businesses struck a 45-year high in April, as the latest National Federation of Independent Businesses (NFIB) Economic Trends Survey showed a drop in poor sales and bump in its Small Business Optimism Index. The index increased only slightly by 0.1 points over March to a score of 104.8.

From a credit perspective, the NFIB study concluded that 50% of survey respondents "were not interested in a loan," scoring one of its lowest readings in nearly a decade. Despite rising interest rates from the Federal Reserve, getting credit hasn't been an issue in years—a mere 2% reported financing problems and 5% reported loans being "harder to get." 


"Never in the history of this survey have we seen profit trends so high," Juanita Duggan, NFIB president and CEO, said in the May 8 report. "The optimism small business owners have about the economy is turning into new job creation, increased wages and benefits, and investment." 


Sales numbers not only exceeded expectations for April, but are also expected to increase in the foreseeable future, according to 21% of respondents, most notably in construction and manufacturing. As sales increased, so did spending. The majority of respondents said they directed spending toward new equipment, while others purchased new vehicles or improved or expanded their facilities. 


Investment is promising in the construction and manufacturing sectors, the report noted, where 38% and 32% of respondents, respectively, predict growth in the coming months.
"There is no question that small business is booming," NFIB Chief Economist Bill Dunkelberg added in the report. "Consumer spending, the new tax law, and lower regulatory barriers are all supporting the surge in optimism across all small business industry sectors." 


-Andrew Michaels, editorial associate

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Wednesday, 29 June 2022